Author: Jonathan Blackwell

Breaking New Ground with Jumbo Renovation Financing

I have been a renovation loan specialist for years and have begged every employer that I’ve had for one thing, a jumbo renovation loan. I have finally gotten my wish and the high-end, luxury market has a new financing toy.

There’s always been a huge gaping hole in the renovation loan market. Falling into that abyss were high-end consumers looking to buy or refinance homes that need mortgages outside of FHA or conforming loan limits. In many higher cost states, like California, mid-range buyers were sucked into the renovation black hole as well.

When the private mortgage market disappeared in 2006 Fannie Mae and FHA stepped up to the plate and provided an outlet for higher cost areas by raising their loan limits from $417,000 an $271,000 respectively. In many areas those are still the loan limits and, per recent developments, they are going to return to pre-2007 levels.

As it stands right now ‘high balance” loan limits in places like California, DC, New York and Hawaii at currently $625,500. If you’ve ever checked out homes in those markets then you know that severely limits your choices unless you have significant assets to invest in the down payment. [rant] A reduction in those loan limits would be high on the the list of moronic housing decisions that FHFA have laid out in the past couple years.[/rant]

In order to protect ourselves and customers against the foolishness of policy makers in Washington, we decided that a new loan product was in order and the JUMBO RENOVATION MORTGAGE was born. Less than a month old demand is high as buyers earnest seek the home of their dreams in housing market that is utterly devoid of inventory. It’s tough on buyer and tough on agents who are seemingly a day late on the most desirable homes.

With renovation financing you don’t need the perfect home, just a good home in a good location. You do the rest with your own personal touch and you end up with the perfect home, your dream home.

Jumbo Renovation Guidelines

Since this is a one of kind proprietary product we decided that we’d roll the product out conservatively. As we start to see more statistics on default rates and customer trends I expect guidelines to expand. As it stands, here are the current underwriting parameters (some exceptions may apply).

Credit Score – 700+ Mid Score

Maximum Loan Size – $1,500,000

Max Renovation Amount – $150,000

Occupancy – Primary Residence ONLY

Max LTV (Loan to Value) – 80% Purchase, 75% Refinance

Reserves – 6 Month PITI (PITI = 1 Mortgage Payment + Escrows)

Major Derogatory Credit (Foreclosure, Bankruptcy, Deed in Lieu) = 7 Year Waiting Period

Clearly we are looking for a well qualified buyer. If you are buying a million dollar house and hoping to use a mortgage then that is probably not a surprise.

If you’ve had some major derogatory credit or just don’t have the assets then we can always explore other renovation options that will get you into the home (like the 203k or HomeStyle) then use the power of time to build equity and assets to pursue a jumbo renovation refinance. We know the renovation market backwards and forwards, creativity is one of our strong points.

The $150,000 max renovation escrow will be limiting to some customers too, but once again creativity financing is possible. Say you plan to add a 2nd story, fully renovate the main floor and build a pool. The contractor bids you are getting average $300,000 for the full project – $150,000 for the addition, $100,000 to renovate the main floor and $50,000 for the pool.

We could help with either the main floor + pool or the addition. Both would add tons of value which would allow you to come back 12 months down the road and do a renovation refinance (using after repair value) to do phase two OR, in some cases, you just added enough value to get a home equity line (based on current value) to finish out the remainder of the renovation.

Guidelines are guidelines and borrowers fit into them and not vice versa. Square pegs don’t fit in round holes unless you take a buzz saw and some sandpaper to them. That’s actually the fun part for us, making things work through experience an creative knowledge.

Have questions? Ready to move to application? No problem, we are here to help. Simply click on the link below and fill out the contact form OR give us a call and we’ll guide you, answer questions and get the ball rolling.

Underwater Homeowner’s in Atlanta Get Refinance Help from Obama Administration

Atlanta, GA (January 2012) – Originally launched in April 2009, the Home Affordable Refinance Program (HARP) was designed to help underwater homeowner’s take advantage of low mortgage rates even if they were low equity or slightly upside down.

By allowing underwater homeowner’s the ability to take advantage of today’s lower interest rates without have to pay down their equity the HARP program was intended to help homeowner’s save money which they would them use to purchase consumer goods or create new jobs.

Sounds like a good idea right?

It was. HARP 1.0 helped a lot of people refinance. It was limited though. There were restrictions, price adjustments and loan to value caps that prevented a lot of Atlanta homeowner’s from benefiting.

One of the biggest issues with HARP 1.0? It was limited to your current mortgage servicer, you had to deal with a big 4 bank. Welcome to your own personal hell.

90+ days turntimes? CHECK. Multiple requests for the same documents? CHECK. Days waiting for you loan officer to return your call? CHECK. Three weeks before an initial decision? CHECK.

Enter HARP 2.0

Limited to a big 4 bank? Not anymore! The new HARP program is opened to all participating mortgage lenders. You can now use the mortgage professional YOU want to use for your HARP refinance. No more 3 month turn times to get your HARP closed. Does 3 weeks sound better than 3 months?

Loan to value restrictions? Gone! No equity, no problem. It does not matter how upside down or underwater you are, HARP 2.0 has no restrictions on loan to value.

Not an Owner Occupant anymore? No problem! HARP 2.0 is available to all homeowners. Second homes, investors, people that have relocated can now take advantage of today’s low rates.

Sounds good right? How do I know if I am eligible for HARP?

HARP 2.0 Eligibility & Guidelines

HARP, sometimes referred to as DU REFI+ or the Obama Refi plan, has some basic eligibility guidelines that potential refinance homeowner’s must meet

In order to be eligible for the HARP refinance program :

Your loan must be backed by Fannie Mae or Freddie Mac.

Your current mortgage must have a securitization date prior to June 1, 2009

You must be current on your mortgage with no late payments in the last 6 months.

If you currently have an FHA, VA, USDA or Jumbo loan you will not be eligible to participate in the HARP 2.0 refinance program. You may have other refinance options, but HARP is not one of them.

No LTV Restrictions for HARP 2.0? Really?

Yes, there are really no loan to value (LTV) restrictions! Even if you are ridiculously underwater, so long as you meet the HARP | DU Refi Plus eligibility requirements outlines above you should be eligible to participate.

Even if you are currently at 200+% LTV you can still benefit from Obama’s Home Affordable Refinance Program. Ready to see if you meet HARP Guidelines? Stop waiting, click below for a HARP 2.0 consultation and we will let you know your refinance options.

Choosing a FHA 203K Lender

When I started specializing in 203K Renovation Loans there were very few people that offered the product. There was little to no training and you were mostly resigned to using a lender that would end up selling the loan to a certain big 4 bank that, quite frankly, sucked.

Times have changed, there are multiple 203K lender options these days and it seems that every loan officer now offers the product. Competition is good right? It is good, for the most part.

It is fantastic for the foreclosure market that lenders have finally joined the show and made the 203K loan widely available. After all, foreclosure renovation loans, like the 203K, the HomePath Renovation and the HomeStyle, are integral pieces to restoring the housing market.

However, the growth of the renovation loan market comes with a price. Lost earnest money, useless inspections, ridiculously long escrows, angry sellers and frustrated home-buyers. It doesn’t have to be that way though.

Those of you that have researched the 203K have seen and heard the horror stories. On the message boards, in the forums and from Real Estate Agents and even mortgage lenders. FHA 203K loans are too difficult, too much paperwork, too slow and too expensive.

Guess what, they are right. They are all of those things if you choose the wrong Loan Officer, the wrong HUD Consultant or the wrong Contractor. 203K loans are a specialty mortgage product, they require a SPECIALIST.

It’s Not the 203K Loan Product, It’s the 203K Loan OFFICER

I understand the bad rap that 203K loans get. I get between 5 – 10 calls a week from frustrated home-buyers working with the wrong loan officer, the wrong lender, the wrong consultant or the wrong contractor. For most of them it’s too late, I can give some advice, but I can’t save them or rescue their closing.

They didn’t do their research. They entered blindly into one of the largest transactions of their life. It’s not all the customers fault, many of them trusted their agent to get them to the right loan officer or that their loan officer was qualified.

I’ll probably ruffle some feathers, but 80%+ of agents and loan officers are not qualified to handle even a basic transaction, let alone a renovation loan. So how do you avoid the 80% and choose wisely? Research.

Choosing Your 203K Loan Officer

I think this is obvious, but clearly you start with Google. Educate yourself on the product FIRST. If you haven’t done the research then how will you know if you loan officer is answering your questions correctly?

As you peruse Google, Bing or Yahoo for 203K info you’ll see at a lot of the same folks showing up. These are you experts. They may not be in your area, but they can probably guide you to a 203K expert that is. Of course, the best bet is to find a national 203k lender (like myself) that can help nationwide so you know that you have a loan officer that can execute the renovation mortgage process.

Don’t forget about LinkedIN or Facebook Fan Page search, both will guide you to 203K experts, who is recommending them and their accomplishments.

Finally, you need to interview the candidates. They should, without hesitation, be able to answer some basic questions. Here are a few of the most important.

What’s the Difference Between the 203K Streamline and the Consultant 203K?

How Many Renovation Loans Have You Closed?

How Are the Draws Disbursed?

What Additional Fees Does the 203K Have?

How Long to Close?

Do You Offer ALL the Renovation Mortgage Products (HomeStyle, HomePath, EEM, Jumbo)

If they hesitate on any of those questions then you do not have a 203K specialist. Finally, if they offer up anything longer than 45 days to close then keep looking. There’s NO reason a 203K loan should take longer than 45 days assuming YOU hold up your end of the bargain and get your contractor bids in a timely manner.

FHA 203K loans are an amazing product. They will absolutely give you the best value on a home purchase. Don’t assume that anyone can execute one though, do your research.